Adaro boosts bond sale 33% to $400m on high demand

Adaro boosts bond sale 33% to $400m on high demand

Netty Ismail and Denise Kee, Bloomberg/Jakarta

PT Adaro Indonesia, the country's largest coal producer, is
increasing its sale of high-yield bonds 33 percent to US$400
million after attracting excess demand, a banker said.

The company plans to price the five-year bonds on Thursday in
New York yielding between 8.75 percent and 9 percent, the banker
said, asking not to be identified. Investors placed orders for
about $1.5 billion of the bonds, the banker said. Adaro earlier
planned to sell $300 million of debt.

Adaro, which runs a mine in Kalimantan island, is selling
bonds to help repay $600 million investors borrowed in August to
help pay for their purchase of Adaro's mine and related operating
assets, including a coal-loading terminal.

Goldman Sachs Group Inc. and JPMorgan Chase & Co. are
arranging the bond sale. The mining company also hired DBS Group
Holdings Ltd., Sumitomo Mitsui Banking Corp, and JPMorgan to
arrange a $250 million four-year loan to help repay debt and cut
interest costs.

Investors in Adaro include GIC Special Investments, a
Singapore government agency that manages its long-term foreign
reserves; private equity units of Citigroup Inc. and Goldman; and
Indonesian investors including Edwin Soeryadjaya, son of the
founder of the country's largest carmaker, PT Astra
International.

The dollar-denominated bonds are rated Ba3, three levels lower
than investment grade, by Moody's Investors Service and B+, one
grade lower, by Standard & Poor's. The bonds will be issued by
Adaro Finance B.V., wholly owned by the coal producer, and
guaranteed by Adaro Indonesia and related company, PT Indonesia
Bulk Terminal.

Adaro has a "consistent operating and production track record
spanning the last 13 years," Moody's said. The mining company has
"large available coal reserves" of about 1.334 billion metric
tons, equivalent to a reserve life of 55 years, the rating
company said.